AN ACT MAKING ADJUSTMENTS TO STATE EXPENDITURES FOR THE FISCAL YEAR ENDING JUNE 30, 2013.

OFA Fiscal Note

State Impact:
See Below

Municipal Impact:
See Below

Explanation

The bill:
1) increases the FY 13 original appropriation by $143.
0 million, to $20.
5 billion in FY 13 (for ten appropriated funds);
2) provides $101.
1 million in FY 12 General Fund deficiency appropriations with equivalent reductions to appropriations (resulting in no net change to the General Fund);
3) includes provisions to implement the budget;
and 4) results in various revenue impacts totaling $72.
7 million as identified below.

Although the bill does not contain revised revenue estimates, it affects revenue since it increases spending in accounts that are partially reimbursed by federal funds, adjusts the transfer between the General and Transportation Funds, and increases funding for tax enforcement.
Revenue gains from these changes, in combination with estimated new revenue from passage of the Sunday Sales legislation (sHB 5021 as passed by the House and Senate) and the April 30, 2012, consensus revenue estimates, when compared with the appropriations levels in the bill, yield estimated FY 13 surpluses of:
$0.
5 million in the General Fund;
$1.
0 million in the Transportation Fund;
and $6.
0 million total in the other appropriated funds.

Sections 1 - 7 include changes in appropriations to seven of the ten appropriated funds for an increase of $143.
0 million from the original FY 13 appropriation (three funds did not have changes to the original appropriation).
The table below summarizes the changes and amount of the FY 13 revised appropriation by fund (for all ten appropriated funds).

Fund Summary

Orig.
Approp.
FY 13 $

Revised FY 13 $

Difference $

Gross Appropriations by Fund

General Fund

19,918,305,927

19,256,362,289

(661,943,638)

Special Transportation Fund

1,345,782,066

1,243,670,120

(102,111,946)

Banking Fund

26,176,878

25,605,784

(571,094)

Insurance Fund

26,131,750

28,740,096

2,608,346

Consumer Counsel and Public Utility Control Fund

25,986,745

25,351,390

(635,355)

Workers' Compensation Fund

22,037,360

21,332,611

(704,749)

Mashantucket Pequot and Mohegan Fund

61,779,907

61,779,907

-

Soldiers, Sailors and Marines' Fund

3,051,536

3,039,412

(12,124)

Regional Market Operation Fund

932,821

932,821

-

Criminal Injuries Compensation Fund

3,602,121

3,602,121

-

Total Gross Appropriations

21,433,787,111

20,670,416,551

(763,370,560)

General Fund Lapses

General Other Expenses Reductions - Executive

(9,066,200)

-

9,066,200

General Other Expenses Reductions - Legislative

(374,000)

-

374,000

General Personal Services Reduction - Executive

(11,538,800)

-

11,538,800

General Personal Services Reduction - Legislative

(476,000)

-

476,000

Labor Management Savings - Executive

(806,963,225)

-

806,963,225

Labor Management Savings - Judicial

(30,622,622)

-

30,622,622

Labor Management Savings - Legislative

(6,671,872)

-

6,671,872

General Lapse - Executive

(13,785,503)

(13,785,503)

General Lapse - Judicial

(401,946)

(401,946)

General Lapse - Legislative

(56,251)

(56,251)

Unallocated Lapses

(91,676,192)

(91,676,192)

-

Unallocated Lapses - Judicial

(5,400,672)

(7,400,672)

(2,000,000)

Unallocated Lapses - Legislative

(3,028,105)

(3,028,105)

-

Total General Fund Lapses

(965,817,688)

(116,348,669)

849,469,019

Special Transportation Fund Lapses

Estimated Unallocated Lapses

(11,000,000)

(11,000,000)

-

Labor-Management Savings

(56,949,138)

-

56,949,138

Total Special Transportation Fund Lapses

(67,949,138)

(11,000,000)

56,949,138

Banking Fund Lapses

Branch Savings Target - Judicial

(63,729)

(63,729)

-

Net Appropriations by Fund

General Fund

18,952,488,239

19,140,013,620

187,525,381

Special Transportation Fund

1,277,832,928

1,232,670,120

(45,162,808)

Banking Fund

26,113,149

25,542,055

(571,094)

Insurance Fund

26,131,750

28,740,096

2,608,346

Consumer Counsel and Public Utility Control Fund

25,986,745

25,351,390

(635,355)

Workers' Compensation Fund

22,037,360

21,332,611

(704,749)

Mashantucket Pequot and Mohegan Fund

61,779,907

61,779,907

-

Soldiers, Sailors and Marines' Fund

3,051,536

3,039,412

(12,124)

Regional Market Operation Fund

932,821

932,821

-

Criminal Injuries Compensation Fund

3,602,121

3,602,121

-

TOTAL NET APPROPRIATIONS

20,399,956,556

20,543,004,153

143,047,597

Spending Cap

The bill is under the spending cap by approximately $86.
4 million in FY 13.
This is $192.
0 million closer to the cap than the original FY 13 budget, which is under the spending cap by $278.
4 million.

Growth Rate

The growth rate for all appropriated funds is 1.
8% over estimated FY 12 expenditures.
See the table below for details.

Growth Rates of Appropriations (in millions)

Est.
Exp.
FY 12 $

Original Approp.

FY 13 $

Revised
FY 13 $

Change From

FY 12 Est.
to Revised FY 13 $

Change From Orig.
FY 13 to Revised FY 13 $

General Fund

18,782.
5

18,952.
5

19,140.
0

357.
5

1.
9%

187.
5

1.
0%

Transportation Fund

1,230.
5

1,277.
8

1,232.
7

2.
2

0.
2%

(45.
1)

-3.
5%

Other Approp.
Funds

164.
5

169.
6

170.
3

5.
8

3.
5%

0.
7

0.
4%

TOTAL

20,177.
5

20,400.
0

20,543.
0

365.
5

1.
8%

143.
0

0.
7%

Section 8 suspends the provisions of CGS Sec.
17a-17 in FY 13 to allow for a 1% Department of Children and Families (DCF) cost of living adjustment for residential care of children private providers.
Funding for this purpose is provided in section 1 of the bill in DCF's budget.

Section 9 distributes the four subgrants of the Priority School District Grant by the four programs.
Funds totaling $121,875,581 is included in section 1 of the bill in SDE's budget for FY 13 for these programs.

Section 10 reduces the town of Franklin's manufacturing transition grant by $395,228 to reflect the actual payment the town should have received.
Section 44 (b) of PA 11-61 had misapplied the total acquisition cost of a certain commercial motor vehicle in calculating the town's grant.

Section 10 also includes an additional one-time payment of $39,411 to the town of Ledyard and $62,954 to the town of Montville to compensate the two towns for a shortfall that occurred when phasing in previously exempted tribal lands to the State Owned PILOT program.

Section 11(a) carries forward1 from FY 12 into FY 13 the unexpended balance of the strategic master plan for higher education funding (estimated at $172,830) within the Office of Financial and Academic Affairs for Higher Education and transfers this funding to the Office of Legislative Management (OLM).
Of the total, $28,854 will be used by the Connecticut Academy of Science and Engineering (CASE) for the purposes of studying the effectiveness of state programs to provide a skilled workforce.
The remaining $143,976 will be used to develop a strategic master plan for higher education within Connecticut.

Section 11(b) carries forward $52,050 from OLM, Other Expenses account from FY 12 into FY 13 and transfers the funding to the CASE account for the purpose of a study to evaluate the effectiveness of state programs to provide a skilled workforce.

Section 12 carries forward $500,000 from the Other Expenses account in the Commission on Human Rights and Opportunities (CHRO) from FY 12 into FY 13 and transfers such funding to the CASE account in OLM.
CASE will use the funding to conduct a disparity study on the state's current set-aside program for small contractors and minority business enterprises.

Section 13 transfers$2 million from the systems benefits charge, a non-appropriated account, to the Operation Fuel account in the Department of Energy and Environmental Protection.

Section 14 carries forward $20,000 of DECD's Main Street Initiatives account from FY 12 into FY 13 for the West Indian parade.

Section 15 carries forward up to $50,000 of the Department of Motor Vehicles Equipment account from FY 12 into FY 13 and transfers to the Other Expenses account for organ and tissue donation awareness.

Section 16 specifies the parameters of the Youth Violence Initiative.
Funding of $750,000 is provided in section 1 of the bill in the Judicial Department's budget in FY 13 for this program.

Section 18 eliminates the Department of Transportation's scheduled 4% fare increases on 1/1/13 for bus and ADA transit.
The Department of Transportation's budget in FY 13 in section 2 of the bill includes an increase to the:
(1) Bus Subsidy account of $1,487,670 and (2) ADA Para-Transit Subsidy account of $59,150 to reflect the elimination of the scheduled fare increases.

Section 19 requires any fees collected for the registration of securities, notice filing and exemption filing under chapter 672a of the general statutes to be deposited in the General Fund rather than the Banking Fund.
This increases revenue to the General Fund by approximately $4.
0 million and results in a revenue loss to the Banking Fund of a like amount.
Currently the Banking Fund receives approximately $28.
0 million per year in revenue with expenditures from the Banking Fund totaling approximately $25.
6 million per year.
The Banking Fund is projected to have a fund balance of approximately $27.
0 million at the close of FY 12.

Section 20 reduces the General Fund transfer to the Special Transportation Fund for FY 13, which results in a $70.
1 million revenue gain to the General Fund (GF) and a commensurate revenue loss to the Special Transportation Fund (STF).
This transfer reduction results from a reduction in the rail subsidy within the Department of Transportation ($3.
1 million), reduction of Pay-As-You-Go ($5.
0 million), savings due to the delay of a Special Tax Obligation bond sale ($24.
0 million), the bonding of Town Aid Road ($30.
0 million), and a reduction to the STF balance ($8.
0 million).

Section 21 reduces funding for the Teachers' Retirement Board (TRB) Health Services Cost account by $7,625,100 and requires this amount be paid by the TRB Health Fund.
This reduction is included in section 1 of the bill in TRB's FY 13 budget.
This shift in funding from the General Fund to the TRB Health Fund increases the total TRB Health Fund payment from 33% to 42% for FY 13.

Section 22 carries forward $270,000 in Personal Services funding and $158,000 in Other Expenses funding for the Office of Legislative Management from FY 12 into FY 13.

Section 23 requires the Judicial Department to fund updates needed to the tracking database for certificates of relief from barriers from the Judicial Data Processing Revolving fund, a non appropriated fund.
It is anticipated that these updates will result in a cost of approximately $200,000.

Section 24 carries forward the unexpended balance of the CT Impaired Driving Records Information System account from FY 12 into FY 13 and transfers these funds to the Criminal Justice Information Systems account in OPM.
It is estimated that $345,710 is available to be carried forward.

Section 25 makes a technical name change and results in no fiscal impact.

Section 26 carries forward up to $350,000 in Personal Services in the Department of Motor Vehicles from FY 12 into FY 13 for staffing costs related to information technology upgrades.

Section 27 requires that the private provider cost of living increase included in section 1 of the bill for various state agencies, shall be used to provide increases in wages and benefits.
Funding of $8.
5 million is included in state agencies that contract with private providers for a 1% cost of living adjustment effective January 1, 2013.

Section 28 diverts $222.
4 million from the early repayment of debt associated with Economic Recovery Notes issued to help balance the FY 09 budget;
diverted funds will be used to pay off any FY 12 deficit and the provisions of Section 29 of the bill.
Early repayment of these notes would save $8.
7 million over the next four fiscal years;
these provisions therefore result in a General Fund cost of $8.
7 million during that same period.
Section 29 specifies that $15.
0 million of these diverted funds would be used in FY 13 to implement any amendments to the Indian Gaming Compacts.

Section 30 carries forward $2.
0 million from the Department of Labor (DOL) Workforce Investment account from FY 12 into FY 13 and transfers funding to the Personal Services account.

Sections 31 - 33 provide FY 12 deficiency appropriations.
This does not result in a net change to the General Fund, as the increase in appropriations of $101.
1 million is offset by corresponding reductions.
The following table shows the changes in agency appropriations contained in the bill.

Changes in FY 12 Appropriations – General Fund

Amount $

Increase Appropriations

Teachers' Retirement Board

2,600,000

Department of Social Services

93,200,000

State Comptroller (OSC) - Adjudicated Claims

5,300,000

Total Increase Appropriations

101,100,000

Reduce Appropriations

Department of Mental Health and Addiction Services

(44,000,000)

Department of Children and Families

(57,100,000)

Total Reduce Appropriations

(101,100,000)

Total General Fund

-

Section 33 allows for the unexpended FY 11 carry forward in the Reserve for Salary Adjustments account to lapse in FY 12 and not be carried forward into FY 13.
This results in additional available funds to offset shortfalls in the General Fund.
OFA is currently projecting $78.
7 million available in carry forward funds to lapse in the RSA account.
This would reduce OFA's projected deficit as identified in our April 30, 2012 General Fund Monthly statement (www.
cga.
ct.
gov/ofa).

Increase to Appropriations $101.
1 million:

Department of Social Services (Medicaid) - $93.
2 million

The $93.
2 million shortfall in the Department of Social Services is in the Medicaid account.
The deficiency in the Medicaid account is largely due to one time anomalies related to the MCO claims tail (claims payable under the Medicaid managed care organization) and accelerated payments under the ASO as well as higher than anticipated expenditures.
The deficiency assumes recent claims trends remain steady for the remainder of the fiscal year.

Office of the State Comptroller (Adjudicated Claims) - $5.
3 million

The $5.
3 million shortfall in the Adjudicated Claims account is due to higher than anticipated claims costs.
It should be noted that until FY 12 this account did not previously receive an appropriation, but was funded out of the resources of the General Fund.
Since FY 97, expenditures have ranged from a low of $3.
9 million to a high of $15.
7 million, with a 15-year average of $8.
1 million.

The $2.
6 million shortfall in the Retirees Health Service Costs account is due to higher than anticipated enrollment in the retiree health insurance program offered by the TRB.
The account was originally budgeted based upon approximately 17,000 participants.
Actual enrollment for FY 12 is now estimated to be 19,000.

Reduction to Appropriations $101.
1 million:

Department of Mental Health and Addiction Services - $44.
0 million

Funding is reduced in the following accounts:

● $31.
0 million in Personal Services, and

● $13.
0 million in General Assistance Managed Care.

The Personal Services funding requirements reflect that the budgeted lapses (holdbacks) and Governor's January rescissions totaling $31.
0 million are released.
The Personal Services lapse is due to savings from the wage freeze, not refilling funded vacancies, and delay in refilling vacancies.
The $13.
0 million projected lapse in the General Assistance Managed Care account is due to lower than expected caseload growth and utilization in the Medicaid for Low-Income Adult population.
This reflects the release of January rescissions.

Department of Children and Families - $57.
1 million

Funding is reduced in the following accounts:

● $34.
0 million in Personal Services,

● $1.
1 million in Differential Response System,

● $8.
0 million in Board and Care for Children - Foster Care, and

● $14.
0 in Board and Care for Children - Residential.

The Personal Services funding requirements reflect that the budgeted lapses (holdbacks) and Governor's January rescissions totaling $34.
3 million are released.
The Personal Services lapse is due to savings from the wage freeze and not refilling funded vacancies.
The $1.
1 million projected lapse in the Differential Response System account reflects start-up delays in the procurement of new community-based resources for children.
The projected lapses in the Board and Care for Children accounts are due to lower than anticipated caseloads.

Section 34 requires the Secretary of OPM to recommend reductions in expenditures of $14.
2 million in FY 13.
There is $14.
2 million General Lapse included in the General Fund budget in section 1 of the bill.

Section 35 carries forward $4.
0 million in the Magnet Schools account in the State Department of Education from FY 12 into FY 13 and transfers these funds to the Talent Development account.

Section 36 carries forward the unexpended balance of the Regional Planning Agencies account in OPM from FY 12 into FY 13.
It is estimated that $275,000 is available to be carried forward.

The Out Years

The table below reflects the projected expenditures for FY 14 - FY 16 based on the impact of the bill. Please note that these are preliminary estimates and are subject to revision.

Projected Expenditures FY 14 - FY 16 ($ in millions)

Projected

Revised FY 13

FY 14

FY 15

FY 16

General Fund

19,140.
0

20,254.
6

21,242.
9

22,102.
4

Special Transportation Fund

1,232.
7

1,274.
5

1,324.
9

1,378.
0

Other Appropriated Funds

170.
3

247.
7

252.
2

256.
9

Total

20,543.
0

21,776.
7

22,820.
0

23,737.
3

% growth

6.
0%

4.
8%

4.
0%

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose.
In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge.
Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 In Sections 11 - 36, any funds that are carried forward from FY 12 into FY 13 that would otherwise have lapsed would affect the surplus/deficit balance in the relevant funds.